Between reforming the IPC and destroying the INE

John MuellerCONTINUE
Updated: 06/30/2022 03:18h
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In the 1990s, Alan Greenspan, chairman of the US Federal Reserve, launched a campaign against the way the Consumer Price Index (CPI) was calculated in his country. So, Greenspan was an undisputed eminence among central bankers. He dedicated several speeches to the subject of prices, in the most influential professional forums, complaining that the way of calculating the CPI overestimated inflation. A debate then arose about the so-called 'hedonic prices'. According to the central banker, the CPI did not take into account variations in product quality. The clearest example was that of computers: a latest model was worth almost the same as another ten years earlier, but the features were infinitely superior in terms of capacity and speed.

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